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This is why you should stop analyzing churn

Updated: Mar 19

Everywhere you look, companies are analyzing churn. There’s churn to examine by recurring revenue, by departing logos, and by reduced active users in your product. At Customer Success meetups, on LinkedIn posts, online articles and blogs, there’s an emphasis on churn analysis. However, there’s a better way to obtain success. Rather than figuring out why customers leave, I recommend you understand why your best customers stick around.

The definition of churn, according to Merriam-Webster, is a regular, quantifiable process or rate of change that occurs in a business over a period of time as existing customers are lost and new customers are added. Churn analysis is when you evaluate your customer losses in order to prevent churn from happening in the future. Many experts insist that knowing your churn is the most important metric for a subscription business. And while I agree it’s critical to understand the rate of customer attrition at your company, I urge you not to dwell there.

Rescuing customers doesn’t work.

Consider the overhead of saving accounts at all costs. The assumption is when you fix problem customers, those customers will stick around. You react by parachuting expensive technical resources into burning accounts to make the save and dragging busy executives into customer meetings to turn things around. Greg Daines, CEO of Client Velocity, shared in a webinar with ClientSuccess, that these reactive heroics rarely work. His data shows that in reality saved accounts are 50% less likely to renew than customers who never needed rescuing in the first place.

When you consider the time and costs you spend on departing customers, it’s like looking through the rear-view mirror as you drive your car. Eventually all that preoccupation with what’s behind you leads you to crash because you don’t know what’s approaching. That’s because, as Zig Ziglar famously said, "When you focus on problems, you get more problems. When you focus on possibilities, you have more opportunities.” It’s better to invest all that time you spend trying to understand why customers leave on learning why they stay.

Greg Daines emphasizes the way forward is to know what drives success for your customers, not failure. Science also shows it’s more effective to focus on strengths rather than weaknesses. That’s because strengths are actually more changeable than weaknesses, even though the opposite seems to be true. While these studies are aimed at developing personal strengths, why not apply the same approach to your business? Rather than struggling to improve areas that don’t work, drive impactful change faster by building on what you and your customers already do well. Since it can be a challenge to comprehend what’s most effective, crowdsource your best customers to learn more.

Learn from your best customers.

Have you paused long enough to explore why your best customers stay? They go live, use your product, and renew month after month or year after year. But why is that? It’s time you reach out and ask them. Be curious and listen to what they do or don’t do that drives their success. Find out how they leverage your products and services, possibly in unique ways, to reach their goals more quickly than other customers. Here are a few questions to get the conversation started:

● How is our product impacting your business? Why?

● Why do you keep paying us year after year?

● What roles do you have on your team that use and administer our product?

● What has the biggest impact for a successful rollout and go live?

Listening to your most successful customers is one of the most important things you can do. When you ask open-ended questions, and then listen with curiosity, you hear what sets your green accounts apart. You notice key trends appear after you interview at least five customers that make all the difference. You might uncover they all have dedicated administrators. Maybe they vigilantly take training or have the same Customer Success Manager. They possibly have a stakeholder that champions the product as well as the change required to have an impact. Find out what is critical in their achieving success. What’s interesting here is that what usually sets customers up for success has less to do with your product and more to do with how your customers function or operate internally.

One note as you start your listening journey: make sure you don’t just listen to the “happy” customers who are quiet and don’t bother you and your teams. Often times, the most successful customers are the loudest and most frustrating to deal with. They complain and challenge you because they push your product to its edges in order to make a difference.

Share the strengths.

Once you’ve identified key factors from your best customers, you then share these practices with all your customers. That’s how you build up your strengths. At one company I worked with I learned the most successful customers had fully trained teams ready to deploy and use the products. To share this best practice with all customers I bundled in self-paced training with the license and provided training offerings that were easy for sales reps to sell and customers to consume.

During onboarding I recommend you document these best practices in Success Plans. In addition to capturing desired business outcomes, I address the tools and services new accounts need to be successful, as well as the risks and gaps that will impact their success with deployment and product usage. It’s the way to build enduring and trusting relationships from the start. What you learn from your best accounts might also drive the creation of internal playbooks for Customer Success teams as well as new services offerings. Once you know what customers want and need, I recommend you bundle these offerings into premium packages to ensure customers are given the right tools for a successful onboarding, implementation, adoption, and beyond.

Listen to innovate.

Now is an especially good time to develop deeper relationships with your best customers. By reaching out to learn about their current challenges and opportunities you create an element of trust that you are in this together. Once you have that trust next explore how you can solve problems together. Frank Harbist, CEO of Emojot, did just that. Frank and his team at Emojot, an innovative, journey-centric CXM company, listened to their best customers and then pivoted the Emojot platform in ways they never imagined. What started as a customer satisfaction tool now provides global customers with Covid-19 related services like real-time health validations, return to work/office enablement, and training. When you listen to your customers you create strong relationships and you partner for mutual success. When you help them out, you keep a current customer and you innovate for all your customers.

It’s more important than ever to have good relationships with your top customers. While they rely on you for your products and services, you rely on them to stay relevant to their needs. Learn why your best customers stick around by listening. Build on your strengths and share what you learn. Listening to and understanding customers is the key to moving your company and your customers toward success.



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